2012 Sustainability Report of the BPM Group

Transcription

1 2012 Sustainability Report of the BPM Group

2 A BANK OF EXCELLENCE FOR A TERRITORY OF EXCELLENCE

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4 This report has been printed on Ecological Paper with environmentally friendly vegetable inks by Grafiche Agema S.p.A. Milan - a company certified for eco-sustainable development. Printing 2

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7 Photo: BPM s Historical Archives 5

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9 CONTENTS Letter from the Chairman of the Management Board 10 Methodology 12 IDENTITY OF THE BPM GROUP 14 Profile of the Group 14 Main Group companies 16 Mission and values Business Plan 20 A structure that reacts to the market 22 Group companies 22 Investments in associates and companies subject to joint control 25 Distribution network 27 Offer of products and services 31 GOVERNANCE OF THE BPM GROUP 33 BPM Governance 33 Particular aspects of BPM's system of governance 35 BPM's corporate bodies 36 General Meeting of Members 36 Supervisory Board 38 Management Board 42 Managing Director and CEO 44 Arbitration Committee 45 Board Sub-Committees 46 BPM's internal control system 48 Internal control structure in BPM 50 Key documents to know more about BPM 52 Management structure of the Parent Company 54 ECONOMIC REPORT OF THE BPM GROUP 57 Economic results of operations 57 Calculation of Value Added 60 SOCIAL POLICY REPORT OF THE BPM GROUP 63 CUSTOMERS 64 Customers' expectations: listening 66 Customer Satisfaction 66 Handling of complaints 67 Other listening and contact channels 69 Transparency and ethics of the relationship 74 Products and services 76 Providing support for the disadvantaged 76 Coping with crisis situations and emergencies 82 Socially responsible investment products 89 Promotion of environmentally sustainable lifestyles 90 Online services 92 Operating in controversial markets 93 Security and privacy 94 MEMBER SHAREHOLDERS 96 BPM's share capital 100 Share capital structure 100 Limits on share ownership 104 Terms of admission to membership and exclusion 105 Value creation and return on capital 106 Communication with Members, Shareholders and the financial community 110 Financial community 111 Rating 113 Involvement of Members 114 Participation at General Meetings 116 Members' Project 116 Members' Associations 117 PERSONNEL 120 Training 125 Development 128 Remuneration System 132 Corporate welfare 135 Health and safety 136 Industrial relations 138 Making differences count and reconciling work/home 139 SUPPLIERS 142 Mission and guidelines of the Central Buying Service 144 Relationship with suppliers 145 COMMUNITY 146 Donations, gifts and sponsorship 148 Other initiatives for the community 161 Conferences 167 Communication 170 ENVIRONMENTAL REPORT OF THE BPM GROUP 174 Raw materials 178 Energy consumption 178 Energy emissions 180 Paper 180 Water 184 Waste 184 Sustainable mobility 185 Green products 186 Dissemination of environmental culture 188 Exerting pressure on environmental issues 194 FIGURES AND RATIOS 196 GRI CONTENT INDEX 231 LETTER OF THE INDEPENDENT AUDITORS 240 7

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12 GRI 1.1 In October 2011, a profound regeneration project was presented to the General Meeting of Members, a project with an ambitious goal: to lay down the foundations of a modern bank able to become the leader in its chosen territories. In the last year and a half, numerous steps have been taken, starting from the approval of a new Business Plan, designed to foster the Group s revitalisation and to ensure sustainable prosperity for all its stakeholders. Various measures have already been launched. a view to streamlining the chain of command and placing resources in the most suitable positions, boosting accountability and meritocracy. We have based our labour relations on dialogue and transparency, respectful of of HR management, including the activation of a voluntary Solidarity Fund that has had far more applications than were expected; this will make it possible for us to take on more young employees in the future. We have also introduced a policy that involves a much greater focus on cost control, based on a spending review that will continue for the whole of 2013, starting with the creation of a single bank. However, this plan has not prevented us from investing heavily in technology and the network: we have launched new products for both individual and corporate customers, and we are currently working on a restyling of branches and windows. Thanks to our new hub & spoke distribution model, which involves a main central branch and various satellite branches, we have managed to improve our coverage of the territory. All of these efforts have been much appreciated outside the Bank as well, which the market. The opinion of analysts has improved: BPM s stock closed 2012 with an increase over the year of nearly 50%, far more than the benchmark indices. A great deal of hard work has enabled us to achieve objectives that we hadn t despite the unfavourable scenario. Indeed, the income statement shows an of 66.1%. In the balance sheet, direct deposits have increased (+9.7% on 2011), as have assets Loans are down slightly (-2.5%), but while this was the case for all business customers, down of our exposure to this sector. Loans to individual customers, on the other of

13 writing off all of our goodwill, activating the Solidarity Fund and increasing loan loss provisions to strengthen coverage, also taking into account the Bank of Italy s audit recommendations. The relaunch plan continues in the right direction. The Bank s priority now is to ensure stability so that it can go ahead with the increase in capital that will be submitted for approval by the General Meeting of Members next June. It will allow us to raise the funds needed to accelerate growth, repay BPM also has to continue its progress towards sound management in order to deserve its rightful place within the Italian banking system. In particular, it has to achieve a stable and transparent governance model. This is a strategic priority to resolve the problems encountered in the past. At the same time, the Bank will have to continue its progress towards change and modernisation, in line with the needs and expectations of the market and of all its stakeholders. In fact, the new BPM has to be everyone s Bank: customers who have placed their trust in us, employees who work day after day with dedication, former employees who have helped to build it, all of the shareholders who, from the outside, believed in the business plan that we launched and the local community to which we offer our support. In short, today s BPM is for all those who believe in a Cooperative Bank able to look to the future, while preserving the principles of mutuality that have been the hallmark of our Bank throughout its 150-year history. Piero Luigi Montani Managing Director and CEO Banca Popolare di Milano Andrea C. Bonomi Chairman of the Management Board Banca Popolare di Milano 11

14 GRI ; ; ; 4.9 METHODOLOGY Guidelines for Sustainability Reporting and the Supplement for the Financial Sector "The Report to Stakeholders. A Guide for Banks" Principles of Preparation of the Social Responsibility Report Gruppo Bilancio Sociale (GBS) The document is structured as follows: Identity: Economic Report: Social Policy Report: Environmental Report: 12

15 With regard to the scope of consolidation, the Identity and Economic Report sections relate to the BPM Group as identified in the consolidated financial statements; unless stated otherwise, the Social and Environmental Reports and accompanying tables refer to the commercial banks (Banca Popolare di Milano, Banca di Legnano, Banca Popolare di Mantova and WeBank), as well as to Banca Akros and ProFamily. Note that the figures for previous years have been restated following the merger between Banca di Legnano and Cassa di Risparmio di Alessandria in To the extent that they are available, the figures and quantitative information cover the entire three-year period and have been taken from various sources: the consolidated financial statements, official communications, remarks by competent external bodies and sometimes from estimates. Whenever there is the symbol M in the document, it refers to numerical details given in the last chapter "Figures and ratios". As in previous years, there is also an appendix containing a glossary that facilitates the understanding of technical terms in English. Numerous colleagues from various Group structures contributed to the preparation of the Social Responsibility Report, which was coordinated by the Communication Department. Furthermore, structures that did not take part in preparing this document in the past have been involved for the first time in order to cover as many GRI indicators as possible. The Social Responsibility Report, which is also available in Italian, is designed as a technical document reserved mainly for a limited audience; for this reason it is only published electronically on the company website, with an eye on cost rationalisation and the environment. The abridged version was distributed during the General Meeting held on 22 June 2013 in order to disseminate the information to the Members. It is available in hard copy to anyone who requests it and can also be found on our website. The structure, contents and methods of preparation of the Social Responsibility Report were approved by the Management Board at the meeting held on 30 July

16 DISTRIBUTION NETWORK: 840 points of sale of which 769 retail branches CUSTOMERS: more than 1.4 million HEADCOUNT: 8,312 persons of whom 8,226 are employees, 86 with other forms of contract THE GROUP S NUMBERS (FIGURES AT THE END OF 2012) GRI 2.8 SHAREHOLDERS: 114,215 of whom 55,662 are Members C ;SUPPLIERS: over 2,900 SHAREHOLDERS EQUITY*: 4,444 million euro *excluding net income (loss) for the year IDENTITY OF THE BPM GROUP 14

17 ;FINANCIAL PROFILE OF THE BPM GROUP GRI 2.1 8,200 employees 769 branches than 1.4 million customers 15

18 GRI 2.2, 2.4 BANCA POPOLARE DI MILANO YEAR OF FOUNDATION: 1865 DISTRIBUTION NETWORK: 543 BRANCHES EMPLOYEES: 6,187 CUSTOMERS: ABOUT 1,000,000 REGISTERED OFFICE: PIAZZA MEDA, MILAN 16

19 B97.8% BANCA DI LEGNANO YEAR OF FOUNDATION: 1887 BRANCHES: 206 EMPLOYEES: 1,332 CUSTOMERS: MORE THAN 250 THOUSAND B6 1.58% BANCA POPOLARE DI MANTOVA YEAR OF FOUNDATION: 1999 BRANCHES: 17 EMPLOYEES: 71 CUSTOMERS: 9 THOUSAND B100% B56.89% WEBANK YEAR OF FOUNDATION: 1999 BRANCHES: 2 EMPLOYEES: 203 CUSTOMERS: MORE THAN 100 THOUSAND BANCA AKROS YEAR OF FOUNDATION: 1997 BRANCHES: 1 EMPLOYEES: 274 CUSTOMERS: 4 THOUSAND B40% B100% PROFAMILY YEAR OF FOUNDATION: 2010 POINTS OF SALE: 39 EMPLOYEES: 102 CUSTOMERS: MORE THAN 100 THOUSAND 17

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21 MISSION, VALUES AND STRATEGY GRI 4.8, 4.14, 4.15 MISSION VALUES INTEGRITY: TRANSPARENCY: CO-OPERATIVE SPIRIT: THE IMPORTANCE OF DIALOGUE: RESPONSIBILITY: 19

22 SIMPLICITY, EFFICIENCY AND MERITOCRACY SIMPLIFY THE CORPORATE STRUCTURE: FROM 14 COMPANIES IN 2011 TO 7 COMPANIES IN 2015 STRATEGY ORGANISATIONAL SIMPLIFICATION: FROM 250 TO 100 ORGANISATIONAL STRUCTURES RIGOROUS MONITORING OF COSTS: PERSONNEL EXPENSES -10% OVER THE THREE YEARS ADMINISTRATIVE EXPENSES -12% OVER THE THREE YEARS MERITOCRACY AND ENHANCEMENT OF PERSONNEL: INVESTMENTS IN TRAINING AND REQUALIFICATION STRENGTHENING INTERNAL COMMUNICATION TECHNOLOGICAL AND ORGANISATIONAL INNOVATION REORGANISATION OF THE BRANCH NETWORK (HUB & SPOKE SYSTEM WITH RESPONSIBILITY IN THE HANDS OF THE HUB MANAGER) INNOVATION OF THE CUSTOMER SERVICE MODEL INTERNET BANKING AND TELEPHONE BANKING AT GROUP LEVEL AUTOMATION OF COUNTER TRANSACTIONS AND RENOVATION OF WORKSTATIONS (PCS, LAPTOPS, TABLETS) 20 PAPERLESS OFFICE AND GRAPHOMETRIC SIGNATURES

23 GRI BUSINESS PLAN RIGOROUS MONITORING OF RISKS, CAPITAL AND LIQUIDITY REALLOCATION OF THE LOAN BOOK REVIEWING AND STRENGTHENING CREDIT PROCESSES AND TOOLS OPTIMISATION OF ACTIVITIES IN RELATION TO RISK SALE OF NON-CORE ACTIVITIES 21

24 GRI 2.3, 2.5 GRI 2.7, 2.9 A STRUCTURE THAT REACTS TO THE MARKET GROUP COMPANIES The Parent Company Commercial banks Main specialist and service companies Company name Banca di Legnano Banca Popolare di Mantova WeBank Territory 22

25 Company name Akros Alternative Investment SGR SpA ProFamily SpA Banca Akros SpA Ge.Se.So. (GEstione SErvizi SOciali) Field of activity 23

26 Commercial Banking GROUP COMPANIES AND BUSINESS UNITS Corporate Banking Treasury and Investment Banking Wealth Management Corporate Centre and other FIELD OF ACTIVITY Portfolio (turnover of less than 50 million euro) (turnover of over 50 million euro) CUSTOMERS SERVED 24

27 INVESTMENTS IN ASSOCIATES AND COMPANIES SUBJECT TO JOINT CONTROL GRI FS10, FS12 Main investee companies % interest 25

28 Investee companies involved in activities that are of importance for the territory % interest 26

29 DISTRIBUTION NETWORK GRI 2.9; FS13 Distribution network of the Group 769 retail branches: 17 private banking centres: 15 BPM points of sale dedicated to companies: 39 Financial shops and direct branches Other distribution channels Financial advisors: Call Centre 898 ATM and 107 Self Service terminals 27

30 28 Banca Popolare di Milano branch in Piazza Wagner: night scene

31 TOTAL BRANCHES BANCA POPOLARE DI MILANO BANCA DI LEGNANO BANCA POPOLARE DI MANTOVA WEBANK BANCA AKROS OTHER POINTS OF SALE PROFAMILY FINANCIAL SHOPS AND DIRECT BRANCHES PRIVATE BANKING CENTRES LARGE CORPORATE BRANCHES AND SME UNITS

32 new Special Situations structure No. of branches Market share TOTAL % 30

33 OFFER OF PRODUCTS AND SERVICES GRI 2.2 Main products and services offered 31

34 GENERAL MEETING OF MEMBERS 3-year appointment 3-year appointment BSupervisory Board Control and supervisory functions BArbitration Committee Arbitration functions It appoints the BManagement Board Business management functions It delegates powers to the BManaging Director and CEO Chief executive officer 32

35 GOVERNANCE GRI 4.1 GOVERNANCE OF THE BPM GROUP General Meeting of Members: Supervisory Board: Management Board: 33

36 Plan to transform the Bank 34

37 PARTICULAR ASPECTS OF BPM'S SYSTEM OF GOVERNANCE One-man-one-vote Restrictions on the distribution of earnings Limit on share ownership Approval clause Limit on voting proxies 35

38 Articles of Association Arts GRI 4.1, 4.5, 4.6 BPM'S CORPORATE BODIES GENERAL MEETING OF MEMBERS 36

39 Ordinary meeting Functions Extraordinary meeting Functions Quorum needed to hold a meeting Quorum needed to hold a meeting Voting majorities Voting majorities 37

40 Articles of Association Arts GRI 4.7 SUPERVISORY BOARD Requirements of Board Members Main duties 38

41 Voting majorities Renewal 39

42 GRI 4.3, 4.4 LA 13 Composition 40

43 Composition of the Supervisory Board at 31 December Name Gender Age bracket List to which they belonged Registration in the Register of Auditors and audit experience NO NO NO NO NO NO CRA NO NO NO F F NO CIC NO NO NO NO Indipendence requirements (*) 41

44 MANAGEMENT BOARD GRI 4.7 Requirements of Board Members Main functions 42

45 Voting majorities 43

46 Renewal GRI 4.2, 4.3 LA 13 Composition: Name Gender Age bracket Indipendence (*) Executive NO NO NO NO NO NO Articles of Association Arts MANAGING DIRECTOR AND CEO 44 Main powers

47 ARBITRATION COMMITTEE Articles of Association Arts Functions Voting majorities Composition ARBITRATION COMMITTEE Acting Arbitrators Alternate Arbitrators 45

48 Articles of Association Arts BOARD SUB-COMMITTEES Committees under the Articles of Association: composition at 31 December 2012 Committee Functions Members 46

49 Main other committees/commissions Committee Functions Members 47

50 GRI 4.11, FS9, SO8, PR7,PR2, PR4 PR9, PR6, SO2 BPM'S INTERNAL CONTROL SYSTEM 48

51 Control level Control level Scope of control Relevant structures 49

52 INTERNAL CONTROL STRUCTURE Supervisory Board Management Board Internal Control and Audit Committee Managing Director and CEO Internal Audit Financial Reporting Manager Other central and network structures 50

53 Supervisory Body under Legislative Decree 231/01 Independent Auditors Chief Risk Officer Network Controls and Compliance Risk Management Anti-Money Laundering 51

54 GRI 4.6, 4.8, 4.10 KEY DOCUMENTS TO KNOW MORE ABOUT BPM Internal sources of the rules underlying BPM's system of Corporate Governance Articles of Association* Regulations for General Meetings* Report on Corporate Governance and Ownership Structure* Framework resolution for rules concerning the admission and handling of members * Code of Conduct of Listed Companies* Code of Conduct on Internal Dealing* 52

55 Related Parties : Rules, which govern the process involving related parties and associated persons (in force since 31 December 2012) Group Regulations (art. 114 CFA)* Register of Insiders and related rules (art. 115-bis CFA) D.Lgs. 231/2001 in BPM: Organisational Model and Code of Ethics* (under review) Regulatory guidelines 53

56 Supervisory Board GRI 4.9 MANAGEMENT STRUCTURE OF THE PARENT COMPANY Audit Overall system of internal control 54

57 Management Board Managing Director and CEO Investor Relations Financial communication to analysts and investors Communication Internal and external communication, relations with the press and other media, institutional relations, corporate image and management of events and corporate social responsibility Chief Financial Officer Accounting, finance investments, management planning and control Chief Risk Officer Risk management, compliance and anti-money laundering Human Resources Personnel management and development Organisation Organisational structure and models, processes, legislation, planning and monitoring activities and projects General Counsel General secretariat, corporate affairs and legal areas Credit & Loans (Chief Lending Officer) Credit policies, granting credit facilities, monitoring and recovery of loans Market risk (Chief Commercial Officer) Commercial, channel and product areas Operations (Chief Operational Officer) Back office, IT, real estate, general services and purchases 55

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59 ECONOMIC REPORT OF THE BPM GROUP ECONOMIC RESULTS OF OPERATIONS GRI 2.8,EC1 direct deposits loans to customers indirect deposits 57

60 Principal balance sheet aggregates (in milions of Euro) Change (+/-) Change % Direct deposits 38,531 35,118 3, Loans to customers 34,791 35, Indirect customer deposits 30,630 31,652-1, of which assets under management 13,764 13, of which assets under administration 16,866 18,576-1, The 2012 and 2011 figures are shown net of Banca Akros's institutional clients Market share Change Deposits 1.77% 1.76% p.p. Loans 1.87% 1.88% p.p. Turning to the income statement: Operating income (1,550 million euro) is up by 14.6% thanks to the interest margin, which benefits from the good trend in the financial margin (+4.2%), despite a lower contribution on the part of the commercial margin. The non-interest margin has increased by 31% thanks to a good net result from banking activities, which more than offset the reduction in net fee and commission income (-5.1%); Operating expenses come in at 1,183 million euro, up by 13.2% on last year because of higher personnel expenses linked to activation of the Solidarity Fund of 213 million euro. Other administrative expenses have decreased (-3%) despite the start-up of major projects based on the Business Plan, thanks to tight cost control and lower net adjustments to property and equipment and intangible assets (-16.2%). Without the non-recurring charge mentioned above, total operating expenses would have shown a decrease of 7.1% and a decline in the cost/income ratio of 12 percentage points compared with the end of Loan adjustments, provisions and other items amount to 965 million euro, an increase of 49 million compared with the end of This result takes into account the increase in net adjustments for impairment of loans (83 million euro, +17.1%) due to the difficult macroeconomic situation in 2012, the situation of some large groups that have resorted to extraordinary administration and the Bank of Italy's audit recommendations, offset by lower provisions for risks and charges and lower adjustments to goodwill (completely written off in the first half of 2012) and intangible assets; 58

61 in view of these trends and after booking income taxes with a positive net balance for 163 million euro, at 31 December 2012, the Group turned in a loss of 430 million euro which, net of nonrecurring items, comes down to 62 million euro. Principal cost and revenue items (in milions of Euro) Change (+/-) Change % Interest margin Non-interest margin Operating income 1,550 1, Operating expenses -1,183-1, Operating profit Net adjustments, provisions and other items , Taxes and other items Net income (loss) for the year The ratios shown in the following table reflect the above trend in costs and revenues and balance sheet aggregates. Some indicators Change ROE 1-9.7% -13.3% p.p. Cost to Income Ratio 76.3% 77.3% p.p. Net non-performing loans/loans to customers 2.46% 1.92% p.p. Total Capital Ratio % 11.84% p.p. Tier % 8.60% p.p. Total funds under management/ Employees 4 (thousands of Euro) Loans to customers/employees 5 (thousands of Euro) 8,321 7, % 4,186 4, % 1 Net income/shareholders' equity at period end net of the result for the year 2 Regulatory capital/total risk-weighted assets 3 Tier 1 capital/total risk-weighted assets 4 Direct deposits + assets under management + assets under administration/total number of employees at end of period + personnel with other types of contract 5 Loans to customers / total number of employees at period end + other types of contracts 59

62 More detailed information is available in the consolidated financial statements of the BPM Group, in the press release on approval of the 2012 annual report and in the presentation of the 2012 results to the financial community ( in the Investor Relations section). CALCULATION OF VALUE ADDED The information on value added is the point of contact between the financial data and the reporting to stakeholders because the figures are taken directly from the consolidated financial statements. Through this statement, which shows the determination and distribution of Value Added (VA), it is possible to highlight the process of formation of the wealth generated during the year and how it has been distributed to the various stakeholders. Distribution of value added to stakeholders (thousands of Euro) Change (+/-) Change % Economic value generated (a+b) 1,023, ,251 60, Economic value distributed to (a): 1,241,418 1,152,028 89, employees 813, , , suppliers 267, ,111-18, central and local government 161, ,415-55, shareholders n.s. - third parties -5,156-6,871 +1, community and environment 3,498 2, Economic value retained (b) -218, ,777-28, MFigures and ratios page 196

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65 SOCIAL REPORT OF THE BPM GROUP GRI

66 64 CUSTOMERS

67 KNOWING HOW TO LISTEN AND TALK TO CUSTOMERS IS ONE OF OUR VALUES. quality relationship with trust transparency dialogue and listening ID CARD (FIGURES AT THE END OF 2012) more than 1.4 million 89.4% 38.5% 44.7% 3.8% 0.6% GRI FS6 65

68 GRI 4.16, 4.17 CUSTOMERS' EXPECTATIONS: LISTENING GRI PR5 CUSTOMER SATISFACTION Customer Satisfaction from the customer's point of view 8th edition 66

69 Customer Satisfaction model to evolve to an "operational" level HANDLING OF COMPLAINTS GRI HR11, PR8 67

70 Trend in complaints

71 OTHER LISTENING AND CONTACT CHANNELS GRI FS5 Banca Popolare di Milano Product Support and We Believe in Young People focus groups BPM Mobile BPM4U 69

72 GRI 2.10 WeBank WeBank Customer Experience Dialogue with SMEs Working Group in collaboration with ABI 70

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74 GRI FS16 Banca Akros golf invitationals contemporary art exhibition 72

75 ProFamily 73

76 GRI PR3, PR4 TRANSPARENCY AND ETHICS OF THE RELATIONSHIP Patti Chiari Consortium 74

77 ProFamily "Genuine Credit" as 75

78 GRI FS15, PR6 PRODUCTS AND SERVICES GRI FS7 PRODUCTS PROVIDING SUPPORT FOR THE DISADVANTAGED Measures targeted at vulnerable groups in general Conto di Base 76

79 Microcredito Milano Nasko Fund new Cresco project Basic Banking Service

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81 Company: Coccodì Managing Director: Gianpietro Seghezzi (centre) Account Manager: Roberto Bianchi 79

82 Immigrants "Extraordinario" The Third Sector Faresolidale Agreements with universities in Milan BE1start and BE1home Right to the Future Young People 80

83 Short-term contract workers "Let's give them a future" The otherwise-abled Victims of usury Conto

84 COPING WITH CRISIS SITUATIONS AND EMERGENCIES Initiatives for individuals and households individuals and households affected by the economic crisis, SUPPORT FOR 510 FAMILIES WITH A NEW-BORN BABY THROUGH THE NEW-BORN BABIES FUND SUPPORT FOR 365 YOUNG GRADUATES OR UNDERGRADUATES WITH HONOUR LOANS AFFILIATED WITH UNIVERSITIES IN MILAN SUPPORT FOR IMMIGRANTS, WITH THE "EXTRAORDINARIO"LINE OF PRODUCTS, AND THE THIRD SECTOR WITH "FARESOLIDALE" Family Plan: Hope Loan: a national microcredit SUPPORT FOR 1,800 HOUSEHOLDS AND 600 BUSINESSES HIT BY THE EARTHQUAKE IN EMILIA ROMAGNA SUPPORT FOR 2,900 HOUSEHOLDS AND BUSINESSES HIT BY THE CRISIS (+60% COMPARED WITH 2011) 82

85 Company: Latteria Vo Grande Chairman: Luigi Panarelli (left) Account Manager: Barbara Zanichelli Lorenzo Andrini (beside her) 83

86 Gasparrini Fund Tremonti instalment skipping: New-Born Babies Fund: CIGS: Initiatives in favour of companies

87 suspension of debt repayments on the part of SMEs stronger company liquidity ABI-CEI agreement in support of micro-enterprises "Credit for reducing payment terms" has Credit for reducing payment terms 85

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89 Company: SerFruit Sole Director: Ludovico Magni (right) Account Manager: Stefano Bestetti 87

90 in towns hit by natural disasters

91 SOCIALLY RESPONSIBLE INVESTMENT PRODUCTS GRI FS11, FS7 GRI FS16 Number of Group customers with ethical funds ,863 4,736 5,227 3,232 2,293 2,

92 VE LE TOGLIAMO DAL FUOCO. FINANZIAMO LE PMI PER FAR FRONTE ALLA RIDUZIONE DEI TERMINI DI PAGAMENTO A TRENTA GIORNI*. Gli impegni non ammettono ritardi. Noi di Banca Popolare di Milano arriviamo puntuali con il finanziamento a 6 o 12 mesi utile alle imprese per rispettare gli impegni con i propri fornitori. È il nostro modo di fare banca, favorendo in maniera concreta e tempestiva l accesso al credito. Perché crediamo che siano le piccole e medie imprese a fare grande il nostro futuro. Per maggiori informazioni su condizioni e modalità di richiesta del finanziamento chiedi nelle agenzie BPM o consulta (area AZIENDE). SPEZIA IL FONDO. ANIMA TRAGUARDO 2018 ALTO POTENZIALE PER UN RISULTATO PIÙ GUSTOSO. INGREDIENTI Portafoglio diversificato. Attenzione particolare alla tutela del capitale. Selezione accurata della componente azionaria. 3 cedole fisse e 1 variabile*. Scadenza 5 anni. PREPARAZIONE Prendete un portafoglio obbligazionario ben diversificato e aggiungeteci una selezione delle più profumate azioni internazionali. Cucinate il tutto affidandovi ad una gestione attiva e professionale. Servite le quattro cedole annuali, tre fisse e una variabile a seguire. Al quinto anno apprezzate l intero risultato. (*) D. Lgs. 192 del 9 novembre 2012 (pubblicato sulla G.U. n. 267 del 15 novembre). Prendere visione delle condizioni economiche mediante i Fogli Informativi disponibili presso ogni agenzia BPM (D.Lgs. 385/93) e sul sito alla sezione (*) Con riferimento ai primi tre anni (2013, 2014, 2015) la Sgr riconoscerà annualmente ai partecipanti un ammontare unitario predeterminato pari a 0,13 Euro per quota. Qualora l importo così determinato fosse superiore all effettivo risultato di gestione, tale distribuzione rappresenterebbe un rimborso parziale del valore delle quote mediante diminuzione del valore unitario delle stesse. Con riferimento all anno 2016 la Sgr potrà riconoscere una cedola fino al 100% dei proventi maturati, in proporzione al numero di quote possedute, al netto di eventuali perdite. Messaggio promozionale. Prima dell adesione leggere il prospetto pubblicato e disponibile presso le agenzie Banca Popolare di Milano, presso la sede di ANIMA Sgr e sul sito Il collocamento del prodotto è sottoposto alla valutazione di adeguatezza o appropriatezza prevista dalla normativa vigente. Anima Traguardo 2018 Alto Potenziale è disponibile dall 11 Aprile al 24 Maggio PROMOTION OF ENVIRONMENTALLY SUSTAINABLE LIFESTYLES 90

93 PRESTA ESTATE : IL FINANZIAMENTO FINO A CON RATE A PARTIRE DA 100 * AL MESE E TASSO CONGELATO AL 7,50%. Per maggiori informazioni entra in agenzia, chiama il numero verde o visita (*) Esempio di finanziamento di 5.000,00 in 60 mesi con rata di 100,69 a tasso fisso TAN 7,50%, TAEG 8,94%. Importo totale del credito 5.025,00 euro. Importo totale dovuto pari a 6.165,07 euro, che include: imposta di bollo 14,62 euro, interessi 1.016,40 euro, spese di istruttoria pari a 25,00 euro, spese di invio comunicazioni annuali e di fine rapporto 2,00 euro, oltre a imposta di bollo 1,81 euro per importi superiori a 77,47 euro, spese mensili di gestione prestito 1,50 euro. Messaggio pubblicitario con finalità promozionale. Per le condizioni contrattuali prendere visione delle Informazioni Europee di Base sul Credito ai Consumatori disponibili presso le agenzie delle banche del Gruppo Bipiemme. Le banche del Gruppo Bipiemme operano come intermediarie del credito per la promozione ed il collocamento dei prestiti personali di ProFamily S.p.A., senza costi aggiuntivi per il Cliente. L erogazione del prestito è subordinata ad approvazione da parte di ProFamily S.p.A., società del Gruppo Bipiemme. Offerta valida fino al We meet the needs of our customers with initiatives and products in step with the times GUSTA IL QUINTO. CESSIONE DEL QUINTO DELLA PENSIONE : IL PRESTITO CON DURATA FINO A 120 MESI E DAL TASSO VANTAGGIOSO IN CONVENZIONE INPS. INGREDIENTI Prestito da a Piano di rimborso da 24 a 120 mesi. Tasso fissato dalla Convenzione INPS. Zero spese d istruttoria. Prestito garantito da assicurazione. Offerta valida fino al 31 agosto Maggiori informazioni nelle agenzie BPM, chiamando il numero verde o visitando PREPARAZIONE Siete pensionati INPS? Prendete un prestito da a , scegliete la durata che preferite fino a un massimo di 120 mesi, aggiungete il tasso vantaggioso definito dalla convenzione INPS, trovate la rata mensile che più vi aggrada anche in funzione della vostra pensione e sottoscrivete entro il 31 agosto 2013 il prestito garantito da assicurazione. Gustate il tutto in tranquillità per un estate senza pensieri. Esempio di finanziamento di ,00 in 120 rate mensili da 178,00 a tasso fisso TAN 8,63%, TAEG 9,37%. Importo totale del credito pari a ,91. Importo totale dovuto pari a ,00, che include: imposta di bollo 14,62, interessi 7.088,47, oneri incasso quota (dovuti all INPS) pari a 198,00. L esempio si riferisce a un pensionato nato il 01/01/1945. Messaggio pubblicitario con finalità promozionale. Per le condizioni contrattuali prendere visione delle Informazioni Europee di Base sul Credito ai Consumatori disponibili presso le agenzie delle banche del Gruppo Bipiemme. Le banche del Gruppo Bipiemme operano come intermediarie del credito per la promozione ed il collocamento dei prestiti personali di ProFamily S.p.A., senza costi aggiuntivi per il Cliente. L erogazione del prestito è subordinata ad approvazione da parte di ProFamily S.p.A., società del Gruppo Bipiemme. Offerta valida fino al 31/08/

94 GRI 4.16, 4.17 ONLINE SERVICES Support channels Results in 2012 Virtual assistant Call me back Customers service Promotion service Twitter Team Trend of online transactions

95 OPERATING IN CONTROVERSIAL MARKETS GRI FS1, FS2 Trend in technical operations in the 3-year period

96 GRI PR1, PR8 SECURITY AND PRIVACY Physical security Trend in branches with biometric recognition systems and robberies suffered

97 Information Security As part of its online services, the Group has adopted the latest security standards in order to improve our systems and prevent computer fraud. Of the interventions carried out in 2012 under the Security Plan, we would highlight the activation of a "Company Security Plan", specially designed for the corporate service, and training and information provided to customers by and web. These efforts, combined with continuous monitoring, has led to positive results for the Group, with cases of fraud in proportion to the number of active customers in line with the system average. Card security Thanks to the adoption of Geoblock from July 2011, the BPM Group has achieved its goal of limiting losses from fraud on international ATM cards. The impact on customers has in fact been positive in terms of perception, management of the service and the result achieved: compared with 2011, the cases of fraud suffered by customers have decreased by 64%, with a saving of more than one million euro (-70%). Since 2012, the service can also be activated via internet banking and is available to WeBank customers as well. To limit tampering with ATMS and further increase customer security, more than 200 distributors and 50 devices able to prevent such tampering and attempts at fraud were installed in Business continuity As required by the Bank of Italy, since 2006 the Group has had a specific plan to ensure business continuity and preserve critical operations in the event of an emergency or disaster that could potentially jeopardise its core activities. A series of test runs in 2012 allowed us to check how we would react if the head office was taken out, activating the disaster recovery system to operate all of the Group's processes. This also allowed us to check the level of preparation of those responsible for the Business Continuity Plan. With regard to online services, a high-tech disaster recovery infrastructure was set up during the year at WeBank. This is an innovative system for the Italian banking scene. In December, the Disaster Recovery Plan was tested successfully with real customers during market opening hours for all Group banks' websites. Privacy We are convinced that personal data should be protected, quite apart from what the law says (Legislative Decree 196/2003). For this reason we adopt suitable and preventive security measures (technical, informational, organisational, logistical and procedural) in line with the Group's internal regulation on privacy. MFigures and ratios pages

98 MEMBERS AND SHAREHOLDERS 96

99 STABILITY, TRUST AND TRANSPARENCY: THESE ARE THE KEY WORDS UNDERPINNING THE RELATIONSHIP. In a co-operative bank like Banca Popolare di Milano ID CARD (FIGURES AT THE END OF 2012) 114,215 3,229,621, % 41.0% 98.4% 35.5% 0.1% 97

100 98

101 99

102 GRI 2.6 BPM'S SHARE CAPITAL SHARE CAPITAL STRUCTURE Share capital structure (% ownership) at the end of 2012 (*) 100

103 Changes in share capital structure (% held) 2012 (*)

104 102

105 103

106 GRI 2.8 LIMITS ON SHARE OWNERSHIP Relevant shareholders at 31 December 2012 Shares % held 104

107 TERMS OF ADMISSION TO MEMBERSHIP AND EXCLUSION rules for the Members' Relations Commission silent acceptance clause minimum number of shares to be held 105

108 VALUE CREATION AND RETURN ON CAPITAL

109

110 108

111 increase in capital 109

112 Perfor mance of the BPM stock in Performance % BPM FTSE Italia na All shares Banks GRI 4.16, 4.17 COMMUNICATION WITH MEMBERS, SHAREHOLDERS AND THE FINANCIAL COMMUNITY 110

113 FINANCIAL COMMUNITY 111

114 Placement of an Unsecured Senior Bond of 750 million euro Trend in analysts' coverage

115 RATING Rating agencies Ratings at the end of 2012 Long-term debt Short-term debt Outlook Date of last revision in 2012 B 113

116 GRI 4.16, 4.17 INVOLVEMENT OF MEMBERS 114

117 115

118 GRI 4.4 PARTICIPATION AT GENERAL MEETINGS GRI LA8 MEMBERS' PROJECT Members Club improving communication channels 116

119 it more dynamic and interactive. The promotion of the new site was accompanied by the "Club & Win" contest which involved the extraction of 10 ipads among those members who within a period of ten weeks provided, confirmed or updated their address. Another innovation was the activation of the "Club TV" which, through YouTube, has the function of attracting younger users, who tend to frequent the web more often. Monthly seminars for the members continued, with meetings on health, wellness, leisure and culture. These events, which enjoyed increasing participation during the course of the year, from September were recorded on video, allowing them to be disseminated with all members enjoying free access to the web channel to watch them. In particular, the September event, "Valuable tips for those who love art", was attended by the Chairman of the Management Board, the Chairman of the Supervisory Board and the Market Manager; during the October event, "The Last Supper by Leonardo as it really was", the doors of BPM's Central Hall were opened to members to show the only lifesize reproduction of Leonardo's work in the world. Lastly, the free medical consultation service and the selection of new suppliers for commercial offers for theatrical, cultural and tourist initiatives continued. MEMBERS' ASSOCIATIONS The dialogue with members and their participation in the life of the co-operative also takes place through the spontaneous aggregation of groups of members (in associations) which, in accordance with the co-operative model and the mission of the Bank, can act as a catalyst of similar interests. MFigures and ratios pages

120 118

121 club tv club& V I NC I salone 119

122 120 PERSONNEL

123 OUR HUMAN CAPITAL IS WHAT WE HOLD DEAREST. people serving customers mutualistic values spirit ID CARD (FIGURES AT THE END OF 2012) 8, % 46.5% 27.2% 13.5% 0.5% 15.3 years 43.9 years 121

124 BPM ON AIR 1 febbraio 2013 Newsletter Cari colleghi, abbiamo lavorato tutti molto nell anno passato e grazie a voi abbiamo ottenuto risultati insperati. Ci resta ancora un lungo percorso: insieme possiamo fare grandi cose per portare a compimento il piano che abbiamo immaginato a favore della nostra Banca. Siete stati i veri protagonisti del cambiamento e vogliamo che sempre più forte sia la capacità, da parte della Banca, di comunicare e dialogare con voi in relazione agli obiettivi raggiunti, ai piani di sviluppo e ai progetti per il futuro. Per questo abbiamo deciso di mettere a punto un nuovo strumento, una LEGGI TUTTO newsletter che sarà il giornale di bordo del percorso intrapreso da BPM verso il rilancio. All interno di questo documento troverete notizie utili e informazioni circa le attività della Banca, ma anche punti di vista e approfondimenti sul settore in cui operiamo. Speriamo di fornirvi in questo modo un prodotto utile, facilmente fruibile e interessante. Minisito. Anche tu protagonista. Il futuro è di chi fa è lo slogan della campagna istituzionale che Banca Popolare di Milano ha lanciato nei mesi scorsi. Un invito a fare, ad essere attivi e propositivi, nel rispetto dei nostri valori e con lo sguardo rivolto al futuro. I colleghi Giorgia, Lucia, Marco e Riccardo, hanno prestato il loro volto alla campagna, diventando protagonisti della pubblicità che nei mesi scorsi è apparsa sui giornali, sui mezzi pubblici, per strada. Oggi è arrivato il tuo momento: registrati al minisito ilfuturoedichifa.it e diventa protagonista del nostro futuro. Perché BPM sei anche tu. Per vedere il backstage con i 4 protagonisti della campagna, insieme a tutti gli altri colleghi che hanno Backstage preso parte ai casting, dai un occhiata a questo video! BPM Intervista a Giovanni Rossi Responsabile Risorse Umane Quali sono stati i criteri che hanno guidato la riorganizzazione della rete in Hub & Spoke, soprattutto per quanto riguarda la scelta delle persone? I mesi autunnali hanno visto le persone della Rete Commerciale impegnate in un importante processo di assessment e di valutazione delle competenze. Si è trattato di una innovativa attività per il nostro Gruppo che ha permesso in MOSTRACI COSA SAI FARE. PARTECIPA AL PROGETTO B.I.G. (BANCA IN GRANDE) INVIANDO LA TUA ADESIONE A BPMNEXT@BPM.IT INGREDIENTI PREPARAZIONE Entusiasmo. Mescolate la voglia di fare e l entusiasmo in incontri periodici. Aggiungete la Voglia di fare e condividere esperienze e strategie. collaborazione del Marketing, delle società prodotto, degli specialisti crm e della 6 distretti, 2 distaccamenti e le Aree Commerciali. Direzione Mercato. Raccogliete gli ingredienti, studiate e preparate la ricetta per 4 team formati da 6 gestori coordinati da un tutor. poi servirla a luglio. Incontri periodici. e delle risorse umane. Concretamente quali sono i comportamenti da attuare perché il nuovo modo di fare banca funzioni? La forza del cambiamento si fonderà sulla capacità di costruire squadre che Quali progetti si concretizzeranno nel 2013? La riorganizzazione delle strutture centrali: migliorando le funzioni di servizio della Sede, LEGGI TUTTO 122

125 INTERACTION AND SUPPORT Easy technological and applications support new initiatives to involve 123

126 124

127 TRAINING GRI FS4, LA11 ProFamily's competitive identity and distinctive skills 125

128 "Multi-skills": objectives of the training course 126

129 Training methods (inc. % of hours given) Course content (inc. % of hours given) 127

130 GRI LA11, LA12 DEVELOPMENT Skills assessment 128

131 Assessment of potential The performance assessment: the Contribution Management System WeBank 129

132 130

133 131

134 GRI LA3 - LA14 EC3 - EC5 REMUNERATION SYSTEM Remuneration policy and system rules that are valid for all Group companies and which are applicable to all employees and freelance workers 132

135 Composition of the remuneration system Cassa Mutua Assistenza di Banca Popolare di Milano 133

136 HEALTHCARE FUND FIXED REMUNERATION VARIABLE REMUNERATION BONUSES AWARDS COMPANY SOCIAL CLUBS NURSERY COMPANY CANTEEN SUPPLEMENTARY PENSION FUND BANKING FACILITIES d REMUNERATION dwelfare AND DEVELOPMENT dtraining dwork ENVIRONMENT (WORK LIFE BALANCE) CAREER PATHS ANALYSIS OF POTENTIAL SKILLS ASSESSMENT PERFORMANCE MANAGEMENT TRAINING ORGANISATIONAL CLIMATE COMMUNICATION SYSTEMS QUALITY OF THE MANAGER-EMPLOYEE RELATIONSHIP WORK/LIFE BALANCE ELEMENTS OF THE REMUNERATION SYSTEM 134

137 CORPORATE WELFARE health care supplementary pension scheme insurance cover economic contribution disabled children insurance for employees annual contribution scholarships contribution banking facilities paid leave care support of members of the family unpaid leave sick children or for when they start going to kindergarten Additional corporate welfare services 135

138 GRI LA6 LA8 LA9 HR8 HEALTH AND SAFETY Parliamo di RAPINE 136 Suddenly you feel upside down.

139 as usual, the promotion of health initiatives, such as visits to specialists at hospitals with which we have special arrangements; adaptation of workstations of colleagues belonging to protected categories; support and advice to employees through individual interviews with psychologists. In more complicated situations, the employee's family and the medical facilities in the area were also involved. Work continued as part of the "Parliamo di rapine" ("Let's talk about bank robberies") initiative, addressed to all Group companies. This consisted of an initial collection of information by the Security and Prevention function on the frequency of such events and a subsequent investigation by BPM psychologists. During the year, 107 employees were involved in robberies, 22 of whom were then interviewed individually by telephone or at their branch. Two debriefings were also carried out with 12 employees. Lastly, the annual meeting of the Committee for the Health and Safety of Workers, which represents the entire workforce, took place and was attended by the people established by law: Employee Safety Representatives and the Employer (or someone delegated by the employer) 24 ; the Head of Prevention and Protection, the Company Doctor 25. Number of people who used the psychological support service Banca Popolare di Milano Banca di Legnano (*) TOTAL (*) Two-year period including Cassa di Risparmio di Alessandria 22 Compliance with the rules on health and safety in the workplace. 23 BPM Agreement of 04/05/2010; Banca di Legnano agreements of 13/07/2010 and 27/07/2010. No new agreement was signed in At BPM, the Employer (i.e. the Managing Director/CEO) delegated a Manager in charge, who in turn sub-delegated specific skills (to the Human Resources, Information Technology, Purchasing and Property Departments). 25 Banca di Legnano's annual meeting was also attended by the Personnel and Internal Audit Departments. 137

140 GRI LA4 INDUSTRIAL RELATIONS 138

141 MAKING DIFFERENCES COUNT AND RECONCILING WORK/HOME GRI 4.8, 4.12, LA8, LA15, HR4 Diversity in the BPM Group Gender: Age: Culture: Skills: 139

142 GENDER ORGANISATION "Gender Organisation" Table 1: % of female staff at the Group's commercial banks AGE DIFFERENCES: ACTIVE AGEING LABORATORY "Active Ageing" Table 2: % distribution by age bracket in the Group's commercial banks Less than 30 years old From 30 to 50 years old Over 50 years old OTHER ABILITIES "Work and Disability" Diversitalavoro 140

143 2013 edition of the Diversitalavoro conference It is worth noting that early this year BPM was awarded the Diversity & Inclusion Award ENHANCEMENT OF PARENTING: THE GARDEN OF BEZ During the year, the meetings organised by BPM's nursery, The Garden of Bez, and the Summer in the City initiative, the campus for children aged 3 to 5 years, were extended to colleagues in the Group. In May, at the Bezzi auditorium, a conference on "Children and food - food as a source of relationships, discoveries and pleasures" was organised by the entity that runs The Garden of Bez with the patronage of the Lombardy Region and of the ASL on a topic of current and future interest (Expo 2015). The meeting was attended by renowned speakers in paediatrics, nutrition and psychology; there were about 70 participants, with a target of parents with children aged between 0 and 6 and educators also from other services. MFigures and ratios pages

144 SUPPLIERS

145 GOODS AND SERVICES: MORE AND MORE A QUALITY RELATIONSHIP ID CARD (FIGURES AT THE END OF 2012) 2, % 61.7% 72% 74.1% 143

146 GRI HR2 MISSION AND GUIDELINES OF THE CENTRAL BUYING SERVICE Transparency and equity in the selection process Fairness in relationships Sustainability in the relationship 144

147 RELATIONSHIP WITH SUPPLIERS GRI EC6, HR2, 4.16, 4.17 At the end of 2012 the Group had 2,700 suppliers, of whom 1,900 are recorded in the Buying Office's Register. Almost all (95%) of the suppliers are based in Italy, which reflects the Group's territoriality. The objective of the Buying Office is to obtain the best market conditions for a certain quality when buying goods and services, while respecting all company rules and regulations, optimising the time it takes to complete the procurement process. In managing relationships with suppliers, since 2010 the Buying Office has been using an electronic platform which promotes interaction with the market, allowing it to get in touch with a large and growing number of suppliers. Other procedures are used to perform checks on the Register and the registration of contracts, while goods and services supplied are checked after the event by consultation with the users. Our traditional policies governing relationships with suppliers continue in a logic of mutual cooperation which is beneficial to both parties: their suggestions, with the assistance that the Buying Office gives to small suppliers, have allowed us to refine our procurement systems and procedures. The standard contract contains a clause that requires suppliers to know and comply with the provisions of Legislative Decree 231/01, also with reference to the Group's Code of Ethics. And, as usual, a self-certification is required to declare compliance with current legislation on environmental and health and safety issues, subject to verification and renewable each year. All of the contracts signed with operational suppliers, with the exception of a few foreign ones, include the above clauses. The relationship with suppliers is managed in compliance with the guidelines laid down in the SIRF Project (Sostenibilità e Integrità nei Rapporti con i Fornitori or Sustainability and Integrity in Relations with Suppliers) which Banca Popolare di Milano signed up for in the past, which requires fairness in all dealings based on a relationship of mutual satisfaction. MFigures and ratios pages

148 COMMUNITY 146

149 TO MEET THE NEEDS OF THE COMMUNITY AND IMPROVE TERRITORIAL DEVELOPMENT: THIS IS OUR GOAL. Being close to our home territories community development exchange of knowledge, skills and resources ID CARD (FIGURES AT THE END OF 2012) % 4.5 million euro 26.9% 50.8% 85.3% 147

150 GRI EC8, SO6 DONATIONS & GIFTS AND SPONSORSHIPS 148

151 Banca Popolare di Milano Sponsorships Culture Charities Sport Pro Patria Other Donations and gifts Culture Healthcare Charities Other 149

152 Fondazione Teatro alla Scala Fondazione Museo del Design at La Triennale church of San Maurizio al Monastero Maggiore Lezioni di Storia La Storia nell Arte 1 150

153 2 151

154 Lezioni di storia. La storia nell arte: ingresso a uno degli incontri presso la Basilica Santa Maria delle Grazie a Milano